106. ECJ Corrects Its Prior Decision On Congruent Dividend Reporting

KPMG Germany Webpage
Click on the above link to visit the KPMG Germany webpage on the Mondaq website
For disclaimer and copyright see end of this article.

In our article no. 52, we reported on the decision of the European Court of Justice (ECJ) affirming the compatibility of congruent dividend reporting with EU accounting law (DB 1996, 1400 - 27 June 1996). Congruent dividend reporting means that a parent company records a dividend receivable on its books in its fiscal year just ended even though the dividend is not formally authorised by shareholder resolution for a distributing subsidiary with the same fiscal year until after the close of this fiscal year. The practice was questionable because the right of a shareholder to a dividend does not arise under company law until it is formally voted by shareholder resolution, an event which, for legal and practical reasons, seldom if ever occurs until sometime in the fiscal year following that for which the dividend is approved when the